Creating a Family Budget to Avoid Financial Issues at Home
The first step to financial freedom is to make a budget.
Add Up Your IncomeStart by taking a careful look at your income for the past three months of your life.
Add Up Your ExpensesOnce you've determined what you make each month, try to find all the bills that you have had over the last three months. If you add them up and divide by three, it will offer you an average because while some expenses, like your mortgage payment, are of a fixed amount, others, like your phone bill, are not. Your next step is to add the last three months of other expenses together and divide by three. Include things like groceries, medical bills, and credit card payments in this category. Record your findings in a notebook. Write down how much you have to spend each month. Some families open a household checking account specifically for their set expenses each month. Bills can be automatically deducted from the account, and you can ensure that you don't get behind on your payments.
Note that you can simplify these first two steps by using a free tool like Personal Capital to aggregate all of your accounts and use it to track your income and expenses for you automatically.
Cut Unnecessary ExpensesOnce you've set up your budget, you are ready to take a hard look at what you are spending on. There may be several ways to change your expenses that you may be simply overlooking. You can start by getting rid of the waste in your life. If you buy your child a toy every time you go to the store, but they are often forgotten about with minutes of arriving back home, that's certainly something you can cut back on.
Likewise, if you drive a huge SUV without a particular reason, choosing a cheaper economy car might be a better decision. Working to get rid of your debt may also be quite helpful. Most families spend six to eight thousand dollars on current credit card debts each year, and who couldn't use an extra six thousand bucks every year for other expenses? Paying down your debts is a great way to save some money in the long run.
Setting up a budget puts you on the way to creating a solid savings account, which can offer you a cushion in times of need. Having a monthly budget can also help to eliminate some of the budget squabbles in your home.
By InvestorGuide Staff